Live Cattle futures spreads: Neutral

  • The February-April closed January at (-$0.95)
    • as compared to the end of December settlement at (-$.60)
    • and the previous 5-year high weekly close for the last week of January at (-$2.30)
    • With the previous 5-year average weekly close for the last week of January at (-$3.85)
  • The April-June closed January at $5.075
    • as compared to the end of December settlement at $5.425
    • and the previous 5-year high weekly close for the last week of January at $8.525
    • with the previous 5-year average weekly close for the last week of January at $3.85
  • The June-August closed January at $2.75
    • as compared to the end of December settlement at $3.225
    • and the previous 5-year high weekly close for the last week of January at $3.375
    • with the previous 5-year average weekly close for the last week of January at $1.325
  • Bottom Line: Futures spreads are indicating the commercial side is reaching an equilibrium between available supplies and demand for those supplies. Given supplies are not increasing, it tells us demand is decreasing, meaning US consumer demand may finally be reaching its tipping point.

Feeder Cattle futures spreads: Bullish

  • The March-April closed January at $2.00
    • as compared to the end of December settlement at $1.10
    • and the previous 5-year high weekly close for the last week of January at $0.60
  • The April-May closed January at $3.15
    • as compared to the end of December settlement at $2.125
    • and the previous 5-year high weekly close for the last week of January at $2.00
  • Bottom Line: As we make our way through the market’s quieter winter quarter (December through February), futures spreads continue to indicate tight supplies in relation to demand.

Lean Hogs futures spreads: Neutral

  • The February-April closed January at (-$7.90)
    • as compared to the end of December settlement at (-$4.80)
    • and the previous 5-year average weekly close for the last week of January at (-$7.025)
  • The April-June closed January at (-$12.775)
    • as compared to the end of December settlement at (-$12.975)
    • and the previous 5-year average weekly close for the last week of January at (-$12.65)
  • The June-August closed January at (-$0.15)
    • as compared to the end of December settlement at (-$0.05)
    • and the previous 5-year average weekly close for the last week of January at $0.35
  • Bottom Line: Lean hogs saw some commercial selling in both the Feb-April and June-August futures spreads. However, there was some buying interest in the April-June spread. Despite the different activity, at the end of January futures spreads still indicated the commercial view was neutral.